Colonization, Social Structure and Development:

the long-term effect of Russian Settlement in the North Caucasus, 1890s-2000s

Timur Natkhov Higher School of Economics

Warwick Summer School in Economic Growth July 9th 2014 Motivation

 What are the effects of colonial rule on long-run economic development?

 Some studies find positive effects as a result of settlers’ human capital, missionary activity and school building policies (Glaeser et al, 2004; Easterly, Levine, 2012; Woodberry, 2012; Wantchekon, 2013)

 Others show persistent negative effects as a result of extractive institutions (AJR, 2001; Nunn, 2008; Dell, 2010) Motivation

 Most of these studies exploit one big event – European colonization of the Americas, Asia and Africa – as a natural experiment of history (Nunn, 2009; Diamond, Robinson, 2010)

 In this framework the case of the remains relatively unexplored

 However, Russian history offers a perfect laboratory for testing different development theories using detailed data

The basic fact about Russian history

"The history of is the history of a country being colonized.

Migration and colonization of the country have been fundamental facts of our history…"

A Course of Russian History (1911)

Vasily Klyuchevsky

1841-1911

“At the guarding border of the Moscow state” (Ivanov, 1907)

This paper

Presents a historical case that provides an opportunity

 for the empirical investigation of the effect of settlement on indigenous population and the subsequent development

 to cope with unobserved heterogeneity better than a cross-country study

• small size of the region • common history

Settlement and literacy of indigenous population in 1897 Long-term effects: average income in 2010

PTG

STV .5

SCH EKD GUN AND NOVNVR KAV MDV TUA TEM EYS LAB ALE DAR SUN

0 AVR

KIZ VLD NAL BTP SAM TMH HSV MKP

-.5 KUR TAB

e( Log Income per capita in 2010 | X ) | X in 2010 capita per Income Loge( GRO -1

-.6 -.4 -.2 0 .2 .4 e( Russian Settlers in 1897, % | X ) coef = 1.01, se = .173, t = 5.82 Long-term effects: education of natives in 2002

VLD NVR .1 GUN SUN

STV NAL PTG .05 TEM EYS BTPEKD SCH

0 NOV HSV MDV LAB KAV TUAALE GRO AND MKP AVR

-.05 TAB DAR TMH

-.1 SAM KUR KIZ

-.6 -.4 -.2 0 .2 .4 e( Indigenous People with College Degree in 2002, % | X ) | X % 2002, in Degree College with People Indigenous e( e( Russian Settlers in 1897, % | X ) coef = .093, se = .045, t = 2.05

Long-term effects: fertility in 2011 .6 GRO KIZ

HSV

TMH .4 DAR TAB

.2 KUR MKP NAL SCH 0 TEMAND BTPEKD AVR VLD SAM NOV TUAALE STV

-.2 SUN LABKAV e( Log Birth Rate in 2011 | X ) X 2011 | inRate Birth Loge( GUN PTGNVR

EYS -.4 MDV

-.6 -.4 -.2 0 .2 .4 e( Russian Settlers in 1897, % | X ) coef = -.864, se = .117, t = -7.34

Long-term effects: quality of local governance in 2007 .4 KUR

TAB KIZ TMH .2 HSV SAM

TEMEYS

DAR

0 ALE AND EKD AVR MDV TUA NOV KAV NVR

LABGUN -.2 SCH

PTG STV

e( Subsidies in Local Budget in 2007, % | X ) | X % 2007, in Local Budget in Subsidies e( -.4

-.4 -.2 0 .2 .4 e( Russian Settlers in 1897, % | X ) coef = -.572, se = .102, t = -5.59 Historians on determinants of colonization

“Unlike the European colonial projects in the Americas and Asia, which were predominantly driven by commercial interests, the Russian expansion in the Caucasus throughout the period was motivated primarily by the government’s geopolitical concerns” (Khodarkovsky, 1999)

List of Russian-Turkish wars

War Results Ottoman military defeat 1 Russo-Turkish War (1568–70) Ottoman commercial victory 2 Russo-Turkish War (1676–81) Treaty of Bakhchisaray 3 Russo-Turkish War (1686–1700) Russia gains possession of Azov 4 Russo-Turkish War (1710–11) Ottoman victory

5 Austro-Russian–Turkish War (1735–39) Treaty of Niš (1739)

6 Russo-Turkish War (1768–74) Russian victory 7 Russo-Turkish War (1787–92) Russian victory 8 Russo-Turkish War (1806–12) Russian victory 9 Russo-Turkish War (1828–29) Russian victory 10 Crimean War (1853–56) Ottoman, British and French victory 11 Russo-Turkish War (1877–78) Russian victory Historians on determinants of colonization

“As Russia extended her southwestern border with Turkey to the northern shores of the Black Sea, the Caucasus took on strategic importance as the eastern extremity of that border” (Rhinelanders, 1975)

Determinants of Russian Settlement

Share of Russian settlers in 1897 (1) (2) (3)

Log initial literacy 0.0217 Log initial population density -0.111 Elevation -0.0927 0.1240 -0.0766 Temperature -0.0332 0.0456* -0.0354* District area 0.0252** 0.0190 0.0246** Distance to the Black Sea -0.814*** -0.754*** -0.853*** Constant 1.030*** 0.911** 0.991***

Observations 30 30 30 R-squared 0.83 0.91 0.82 The primary determinant of Russian settlement

STV .4 PTG LAB ALE EKD KAV VLD NVR

.2 MDV

AVR SUN TUA BTP NOV SAM

0 KUM TEM EYS DAR MKP KUR

GUN

AND -.2

SCH TAB e( Russian Settlers, % | X ) X | % Settlers, Russiane(

TMH

KIZ -.4 GRO NAL HSV

-.4 -.2 0 .2 .4 .6 e( Distance to the Black Sea coast | X ) coef = -0.81, se = 0.16, t = -5.17 Evidence on exclusion restriction Evidence on exclusion restriction

Placebo test for South Caucasus: Russian settlement Placebo test for South Caucasus: literacy of natives IV regressions

Literacy rate among indigenous population (1) (2) (3)

Russian settlers, % 5.587*** 5.644*** 6.794*** Settlers’ literacy 6.080 2.905 4.258 Population density -0.0206 -0.0304 District area -0.132 -0.202* Elevation -0.221 Temperature -0.194

Distance to the Black Sea -0.626*** -0.784*** -0.756***

First stage F-stat 39.05 19.41 14.11 Observations 30 30 30 R-squared 0.74 0.81 0.83 What are the potential mechanisms?

 State building

 School building

 Social structure State building

 The absence of centralized political authority – the main problem Russian rulers faced in the North Caucasus.

 The colonization “was not so much a question of how to divide and rule as how to unite and absorb” (King, 2008).

 The creation of the Caucasian Vicegerency (namestnichestvo) in 1844 was a first attempt to integrate the region into the imperial administrative system (Rhinelander, 1981). State building

Number of Russian civil Number of Russian administrators per military per thousand of thousand of indigenous indigenous population in population in 1897 1897

Russian settlers 0.462** 0.277** Settlers’ literacy rate 0.0931 0.0774 Population density -0.00107 -6.35e-05 District area -0.0221 -0.00703 Elevation -6.10e-07 3.52e-05 Temperature -0.0167 -0.000745

Constant 0.0656 -0.0443 Observations 30 30 R-squared 0.307 0.319 School building

50

45 Stavropolskaya (92 % of

40 Russians)

35 Kubanskaya (90 % of

30 Russians)

25 Chernomorskaya (60 % of 20 Russians)

15 Terskaya (34 % of Russians) 10

5 Dagestanskaya (2.8 % of 0 Russians) before 1852 1857 1862 1867 1872 1877 1882 1887 1892 1897 1848 Who had benefited the most?

Number of Number of schools Number of schools schools per 10 000 per 10 000 of in 1897 of indigenous population in 1897 population in 1897

Russian settlers 43.66*** 2.319*** 274.9*** Settlers’ literacy rate -3.011 -3.323** 115.2 Population density 0.263** -0.0637*** 0.779 District area 1.751*** -0.196*** -10.46 Elevation 0.899* 0.0163 -0.847 Temperature 0.270 0.227*** -19.61*

Constant -19.04** 3.717*** 49.38 Observations 30 30 30 R-squared 0.932 0.800 0.507 Building a nation through education

100%

90% only 80%

70%

60%

50% Russian and indigenous

40% languages combined

30%

20% Indigenous languages 10% only

0% 1880 1883 1886 1889 1892 1895 1898 Occupations by ethnicity in 1897

Total 67% 28% Russians

Administration 80% 14% Indigenous people Education & Science 76% 8%

Health care 79% 6% Others ethnic groups (Jews, Germans, Farming & herding 67% 31% Greeks) Social structure

Employment in Employment in Employment in education health care agriculture

Russian settlers, % 0.617*** 0.343*** -12.56 Population density 0.00697 -0.000706 -0.567 District area -0.181* -0.139** 8.443 Elevation 0.0901 0.0112 -0.00211 Temperature 0.162 0.0877 -29.00**

Constant 3.540** 2.910*** 763.4*** Observations 30 30 30 R-squared 0.407 0.460 0.330 Conclusions

 Russian settlement in late 19th century resulted in human capital accumulation among the native population • 10% increase in settlers 4.5% increase in literacy

 This settlement effect had long-term consequences for local development today

• income • education • quality of local governance

 State building, school building and social structure are the most likely channels of influence Russian history in the colonial framework

 The expansion of the Russian state from a small Moscow principality into one of the largest empires in the world is comparable in speed and magnitude with the expansion of the British, Spanish and French Empires.

 However, unlike the European powers, Russia was a continental Empire (much more like the Habsburg and Ottoman Empires).

 Contiguous land borders with colonized people created different incentives for the metropolis and, as a result, a different set of institutions and policies in the colonies.

Long-term persistence: Russians in 1897 and 2002

STV

.4 ALE

MDV PTGNOV LAB GUNKAV NVRTUA .2 AVR SCH EYS

TEM EKD

0 AND SAM VLD MKP BTPSUN

NAL DAR -.2

TMH TAB

-.4 HSV KUR e( Russians by Ethnicity in 2002, % | X ) | X % 2002, in Ethnicity byRussians e( KIZ

GRO -.6

-.6 -.4 -.2 0 .2 .4 e( Russian Settlers in 1897, % | X ) coef = 1.00, se = .089, t = 11.29 Summary statistics

Mean Std.dev. Min Max N

Literacy in Russian among indigenous 5.2 8.3 0.10 32.0 30 population, %

Literacy in Non-Russian languages 6.9 6.1 0.37 26.3 30 among indigenous population, %

Russian settlers, % 47.1 41.2 0.06 98.7 30

Russian settlers’ literacy, % 29.5 17.4 11.5 78.6 30

Population density in 1897, per sq. km 22.3 11.0 3.4 55.7 30

Population density in 1865, per sq. km 15.1 9.8 1.5 44.0 30